The rise of solar energy

The crash of the prices of petroleum and coal prices in the second half of 2014 was perceived as threat to the progress of developments in alternative sources of energy. Indeed, if the cost of fossil fuel was the only driver in the thrust to develop renewable and cleaner energy sources, this would have been the case. However there are other, and maybe even more important concerns, in the thrust towards the development of other energy sources. These are the environmental concerns, namely pollution and global warming and the knowledge that the supply of fossil fuels is finite and that therefore alternative energy sources must be developed now for the sake of the energy requirements of future generations. Even the biggest oil exporters are aware of these and this is one reason why Norway and Saudi Arabia have the biggest sovereign wealth funds to set aside a buffer of investments to continue to provide revenue streams for their respective countries when oil revenues start to go down. There is also the case of Dubai which has reinvested its oil revenue surpluses into making Dubai a trading, financial and tourism center in the Middle East after its oil reserves have practically been depleted.

It is therefore remarkable that the developments in renewable energy have continued to grow at an accelerated rate even though there has been a glut in the supply of petroleum and coal and a consequent drastic drop ontheir prices over the past two years.

The growth in the use of solar power based on photovoltaic panels has been one of the most dramatic phenomenon among renewable energy uses. According to the April 16 issue of the Economist magazine, global solar energy capacity grew by 26 percent in 2015. Based on announced projects throughout the world including the Philippines, this rate of growth in solar energy will be sustained and probably even accelerate. In the Philippines, the operational solar capacity from solar farms and rooftops of commercial establishments is now estimated at over 500 megawatts. This does not include residential properties with solar installations. China is now the biggest producer of solar energy accounting for 3 percent of its total energy production. This is expected to grow given its present plans to expand its solar energy capacity. The main drivers of the rise of the use of solar energy are technological breakthroughs in the production of photovoltaic panels and in the conversion of the sun’s radiation into energy. The Economist cites an 80 percent drop in the cost of solar panels since 2010. While the rate of drop in the cost may be bottoming out, further technological breakthroughs may be expected in energy conversion and in the development of batteries to store solar energy. Technological breakthroughs that would bring down the costs of storing solar energy in batteries would have far reaching impacts in making solar power an even more stable power alternative. Most solar power plants supply energy only when the sun is up because the cost of batteries to store the solar energy is not yet economical. Solar energy from photovoltaic panels cannot therefore be supplied at night and fluctuates downward when clouds block the path of the sun’s rays to the solar panels. Technological breakthroughs in battery development will also help resolve one dilemma in its use for electronic vehicles (EVs) and this is not only in terms of its range or cost. The issue is the source of energy in charging the EVs. If this comes mainly from the carbon fuel powered electricity sources, then the emissions caused by the charging batteries of EVs can negate the impact of zero emissions achieved through the use of the EVs. The trade off in this equation can vary from country to country such that the economics of using EVs in Hong Kong would not be the same as the economics of using EVs in California. The location of solar farms also make for different economics. For example, the number of sunny days a year in the location of the solar farm has a direct impact on its economics. The arid sunny parts of the world are the more effective areas to locate solar farms. This is why China is developing a massive solar farm in the Gobi desert and why solar power plants abound in the Mojave desert of California. This means that there is very great potential in using arid land areas in producing electricity with the use of photovoltaic panels which have low opportunity costs because such land would otherwise be unproductive. This has positive implications for the arid areas around the world and economies of scale will bring down the production costs per megawatt produced.

There are other alternative sources to generating energy aside from fossil fuel. In the Philippines, we have also seen rapid developments in the use of wind, bio-mass and hydro to generate power. The pace of growth has not been affected by the drop in prices of fossil fuels. This is encouraging because the need to generate alternative sources of energy is a race against time due to threats to the environment and the limited supply of fossil fuels.